A Budget Analysis

  5 min 11 sec to read
A Budget Analysis


The government recently introduced the budget for fiscal year 2020/21. Some economists have praised it beyond measure. Others have not. Now who is to believe?

This time too, the budget is of a deficit. Out of the budget of around Rs 1,474 billion, the government plans to spend nearly Rs 1,050 billion for running its administration, paying salary to its employees, and only Rs 350 billion for development – or just 23 per cent of the budget. That, too, if the foreigners give us loans. Because the government’s income from revenue collection will be just Rs 900 billion, the rest of the budget has to be raised through loans. However, despite all this, the government says our economic growth rate will be seven percent! And the inflation rate too will be seven percent. Something has definitely gone wrong somewhere. But then again, one can still dream!

Some analysts say the government did not bring a revolutionary budget, it brought out a traditional budget like in the previous years. But that is wrong. Because the budgets of the past used to be full of slogans. This time the budget is slogan-free. There is only one place where the finance minister has mentioned carrying out several programmes with the sloganeering spirit of ‘Let’s build our villages ourselves’. But it’s unclear whether that actually means ‘let’s build our private mansions with public money’ for the politicians.
Similarly, you can’t criticise the thinking of the finance minister just because some promises of the new budget have been copied and pasted from the past budgets!

Yes, the government has found an easy way to prepare the new budget by increasing the taxes and foreign assistance expectation instead of decreasingexpenditures. After all, all that the finance minister has to do is read out the budget in parliament and get a few hundred copies of that printed. Then who reads it? After all, the budget is an estimated detail of income and expenditure. So the job is to make an estimate; it doesn’t need to be real. So far, when and where have the things written in the budget speech been realised? In Nepal introducing the national budget is like throwing a stone into anempty sky. A veritable pink elephant!

It is being said the government’s revenues will decrease this time and so will the remittance. And the foreign currency reserve too will decline as the exports have declined. Foreign loans, grants and technical assistance too will decrease. But government experts say it is difficult to decrease the expenditure even though the state coffers will shrink. They are right. Because the ministers’ and government officials’ bellies will still grow. That’s why the development budget was decreased by 14 per cent and government’s administrative cost by just one percent compared to the previous year’s budget.

Several ministries are needed to run the government. A ministry means there are several mouths to feed such as the minister, secretary and other officials. They have to be paid salaries and allowances. On the other hand, the army, police, parliament etc, too, have to be satisfied. Enough funds have to be allocated for them. Therefore, for example, the Local Infrastructure Development Partnership Programme, more commonly known as the MP’s Fund has been continued in the new budget. And for this, Rs 6.6 billion has been earmarked. This means ‘hail the politics of votes and down with the spirit of federalism’.   

Some economists say the government could not gather up any speed. What is the point in talking about speed when there is no train? What can be done when the revenue is barely enough to meet the government’s regular expenditure, the capital expenditure cannot create capital and there are no savings? There are people who said the government could delay its projects for bringing trains and ships to the country. Because the people are suffering more due to lack of proper food and the inability to travel and go anywhere. Can’t the government then listen to the people’s voice sometimes, if not every time? That is exactly what the government did by delaying the train of development in the past. But this year, it could not stop and funds for trains, ships and big buses have been allocated in the budget. So maybe the government will really gather some pace now!

Things are difficult for the government as well. Whatever the reality, the government cannot afford not to show off. So, the people in the government are bound to talk big, as if paradise is just around the corner. Otherwise, the people would stop trusting them. So, it has to make everyone believe that it will meet the revenue mobilization target by increasing the customs duty on imports and taxes on liquor, cigarettes and tobacco. What can you do, as the country has caught this mysterious disease. Only the finance minister and his ruling side are cheerful when he makes the budget speech in parliament; the people who send them to that parliament are always taken aback!  

Now the situation is such that even Nepal’s two huge neighbours India and China are going to have negative economic growth rates in the next year. But our government says the Nepali economy will have a seven percent growth rate in the upcoming fiscal year! When the weather worsens in the neighbourhood, Nepal’s weather, too, deteriorates. That is why the economists say Nepal’s growth rate too is going to decline. And our middle class will transform into the lower-middle class and the lower-middle class into the destitute class. So, analysts only wonder how the government is going to realise its target. But the analysis of these analysts is wrong. Because our government is still strong; it enjoys a two-thirds majority. It’s just that the prime minister is a bit feeble. You surely got the point!

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